Geithner Grilled on Economy, Interest Rate Rigging

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Treasury Secretary Timothy Geithner is blaming the European debt crisis for sluggish growth in the United States.

Geithner's testimony before the House Financial Services Committee Wednesday, coincided with news that Europe produced more dismal economic numbers and Britain's recession deepened.

"The ongoing European crisis presents the biggest risk to our economy," he told lawmakers.

"The economic recession in Europe is hurting economic growth around the world, and the ongoing stress in financial markets in Europe is causing a general tightening of financial conditions, exacerbating the slowdown in growth," Geithner continued.

Geithner warned that tax hikes set to kick in next year and potential spending cuts also threaten the country's economic growth.

Meanwhile, Republican lawmakers criticized him for failing to alert Congress four years ago of concerns that banks could be manipulating a key global interest rate.

Testifying at the same hearing, Geithner said he was "very concerned" that the rate-setting process lacked integrity.

"We took the initiative to bring those concerns to the broader regulatory community," he claimed.

As head of the Federal Reserve Bank of New York in 2008, Geithner discovered big banks were trying to rig a benchmark interest rate known as the London interbank offered rate, or LIBOR.

He eventually pushed broad reforms to the rate, but Geithner admitted Wednesday he failed to alert federal prosecutors to the wrongdoing.

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